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Do you know what your business costs?
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Do you know what your business costs?
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Posted by BrendaTx on 6/2/11 7:09am
Msg #384919

Do you know what your business costs?

http://www.nppa.org/professional_development/business_practices/cdb/cdbcalc.cfm

There you are, a nearly perfect calculator to figure out what you need to make to profit by $xxxx.

Just zero out the photography-only factors and have fun...or, not. Newbs will be shocked at the cost involved in doing business.

Reply by Linda_H/FL on 6/2/11 7:18am
Msg #384920

Something I didn't see specifically listed

Federal income tax and, if applicable, state income taxes on income - unless this is included under "Taxes" - not sure.

Reply by Linda_H/FL on 6/2/11 7:19am
Msg #384921

Blah..did it again...

The federal and state taxes, IMO, should be a category all by themselves

Reply by BrendaTx on 6/2/11 8:24am
Msg #384925

Re: Blah..did it again...

Lol, Linda! Surely that box can prompt a user to add two or three figures together, or to recognize that there are more
costs than they may have earlier considered.

I would like to get a calculator together for notaries....or a spreadsheet. It is very helpful....or at least, gives one an idea of costs of doing business.

Reply by taxpro on 6/2/11 5:14pm
Msg #384979

Re: Something I didn't see specifically listed

If you want to compare "apples with apples" with a certain salary from a regular job, you should only subtract 7.65% for self-employment tax. You would have paid the other 7.65% as Social Security anyway (5.65% for 2011 only), and you would have paid federal and state income taxes anyway.

Reply by Linda_H/FL on 6/2/11 5:22pm
Msg #384982

Maybe I mis-stated it..

People who are so happy that "Yay I made $75 for that signing" forget that they have to deduct expenses from that $75 before they can determine what they "made" (their profit) - and many many people, especially those new to the business, probably don't even consider that one of the most major expenses are the taxes. They figure $75 less gas, toner, paper, etc etc...many never even consider the federal tax right off the top, not to mention Social Security (both sides) and SE taxes. They forget about those things until tax time comes around...

Reply by BrendaTx on 6/2/11 7:11pm
Msg #385006

Exactly, Linda!

It's a prompt, not a great one, but the sheet has prompts to help people understand what the biz is costing them.



Reply by Notarysigner on 6/2/11 7:54am
Msg #384922

Well the first thing I realized is there has got to be a box entitled, "Salary from other sources" LOL Thank you Brenda for always providing the "food" that feeds us. And good morning to you!

Reply by BrendaTx on 6/2/11 10:12pm
Msg #385026

Er...um...good morning to you to, James.

I missed it the first time. Smile

Reply by Bob_Chicago on 6/2/11 10:25am
Msg #384928

Very informative, but keep in mind that many of the

costs listed are costs that would be incurred even if you were not operating a business.
Most of the full time NSAs on Notrot, operate as a home based biz, and use a portion of their
residence to operate their biz.
In most cases, you need a place to live, health insurance, some type of transportation, some type of communication and computer equipment, etc, etc.
I look at my business costs, as the incremental costs incurrted in running my NSA biz in excess of what I need just to live.
For example , I need to own a car. There is a base cost of ownership, insurance , licences, and maintenance. Gas that I use to travel to appointments is a biz costs, additional maintenance due to biz mileage is a biz cost.
In today's world, you generally need a computer to function. I have cable TV, internet and land line on a package with Comcast. High speed laser printer , toner and paper is a biz cost.
Cell phone charges in excess of basic service is a biz cost.
State, Federal and Soicial security tax is based on my net profit from running my biz.
If you are going to operate a NSA biz, you need to be a Notary, need E & O, need to belong to
NOTROT, and others as you determine, before you do a single signing. These are fixed costs, and
are necessary if do 30 signings a week , or sit home posting clever stuff on NOTROT.
When you are deciding if it is worth it to accept a particular signing offered to you, you need to consider what additional costs you will incur to do the specific signing .
Everyone's circumstances and needs are specific to the individual. You must determine what works for you , and what you would do with the time if you do not accept the signing.

Reply by MW/VA on 6/2/11 10:54am
Msg #384932

Great advice, Bob. For many of us, our biz costs are a

percentage factor on things like vehicles, etc. I use software programs: QB Simple Start & Turbo-tax
Home & Business. I also know how to keep records of my costs. Many of us know that the IRS loves to go after small home-based businesses.

Reply by BrendaTx on 6/2/11 11:19am
Msg #384936

Re: Very informative, but keep in mind that many of the

*You must determine what works for you , and what you would do with the time if you do not accept the signing.*

I suggest that one should find profitable ways to spend his or her time if he or she is not making money. That is what I do.

Better to make $10 (profit) on a 10 minute general notary stop than to lose on something else that has you tied up for two - three hours.

If you spend time as Bob suggests, posting clever things on NR, and IF your business is losing money, you are still ahead if it is not making a profit already. (Bob and I always go round and round about this. I feel that one should find work to support him- or herself...not lose money at being a signing agent. )

I posted this so those without understanding of business costs understand before the end of the year when they realize he or she is making $6 an hour or minus $1 per hour.

Many feel that $65 is a fair amount to print, sign and deliver documents. (Pick up and deliver car wash and vacuum service pays about that amount and you are using their gas. Sure you spend a little bit on supples, but no wear and tear on your equipment to speak of. Higher profit margin.)

If you can do like Bob says and run a biz on the bare minimum, then that $65 might be awesome for you, but you need to figure it out for yourself.

I feel that a fair way to look at this is to consider what you will put on your tax return. What are you reporting to the government? It will sober you right up when you take that off of your "net profit" and realize what you've actually done all those $55-$65 signings for (in SOME circumstances).

Further, because I have a home business, I am supposed to keep two computers / one for work if I am going to use a Section 179 deduction, when I do when I buy a new computer. An alternate is critical to the "oops, this old girl is GONE". (Best practice according to my tax advisor).

I would not have a sophisticated back up system, two printers, two computers and several other items if not for a home biz.

I do not use square footage for home office or take those deductions because I don't think in my case it is necessary or reasonable.

I do make sure that I have an alternative means of 'net available if I need it, and sometimes I do. It is vital to my biz.

At the end of the year, my tax return tells it all.


Reply by HrdwrkrVA on 6/2/11 1:05pm
Msg #384947

If you use the reasoning that "something's better than

nothing", why stop at $65 or $55?? Why not take a $10 signing? You're not doing anything anyway!! If you're doing lowball signings - this is a hobby!! When the SS's offer you a $65 signing they're hoping they have an idiot on the other end - and yes - sometimes they get lucky. They're hoping you don't have a clue about running a business or basis costs: paper, toner, gas etc. I got one today w/ 142 pgs (plus fax-backs) - they'd have been ROTFL if I'd priced that at $65 or $55.
Even the IRS says that if you run a home-based business for xyz number of years, that LOSES money - it's a HOBBY!! SMH-SMH-SMH!

Reply by JanetK_CA on 6/2/11 5:39pm
Msg #384987

Re: Very informative, but keep in mind that many of the

"I look at my business costs, as the incremental costs incurrted in running my NSA biz in excess of what I need just to live."

I usually agree with you, Bob, but not this time, I'm afraid. Maybe as it applies to tax write-offs, but not when it comes to setting fees and valuing a business service.

I see one potential problem with looking at it this way, depending on the person's intent for being in this business. If a person has enough other primary income to cover ALL the costs that "would be incurred even if you were not operating a business" and is using this business just for some extra cash, then that may make some sense.

However, if someone is looking at this as a way of making a living or a *replacement* for having a job, then that's a really bad way to look at it. All the things that you say we "need anyway", have to be paid for somehow. If we have a job, our salary pays for all of those thing (hopefully). But if someone is dependent on their business, then they need to factor in enough PROFIT to cover all those things that we "have to have anyway". Most people who own a business expect the business profit to be able to pay them a big enough salary or have enough left over to cover ALL their basic living costs, at minimum. At least that's what they should have in their business plans.

I think this is the biggest error in thinking that a lot of people have and is at the heart of why so many undervalue themselves and are willing to work for lowball fees. And the more our field gets filled with people who are just looking for a little extra or beer money or whatever, the harder it will be for us to continue to expect to be paid decent fees. I don't mean this to offend anyone who is in that category, but I think it's an important issue when it comes to thinking like a business owner and deciding how to value our services.



Reply by Lee/AR on 6/2/11 10:31pm
Msg #385029

Right! Believe this: If you don't value your time

experience & knowledge, nobody else will. If you don't factor in all costs to provide a profit, you will be used by everyone. If you're doing this rather than 'doing nothing'....hey, you've got yourself a hobby; not a business.


 
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